What Happens If Your Home Doesn't Appraise for the Sale Price?

Receiving an accepted offer on your home is an exciting milestone. Before the sale can close, though, there's one important step that can affect the transaction: the home appraisal.

If the appraisal comes in lower than the agreed-upon sale price, it doesn't necessarily mean the deal is over. There are several ways buyers and sellers can work together to keep the transaction moving.

Here's what South Florida sellers, from Homestead to the rest of Miami-Dade, should know about a low home appraisal.

A home appraisal is an independent opinion of your home's market value, typically required by a buyer's lender.

The appraiser considers factors such as:

• Recent comparable sales
• Your home's size and condition
• Upgrades and features
• Location
• Current market conditions

The lender uses the appraisal to help determine how much they're willing to finance.

If the appraised value is lower than the contract price, the lender may not approve the full loan amount.

This can create a gap between:

• The agreed-upon purchase price
• The home's appraised value

Both the buyer and the seller will need to decide how to move forward.

A low appraisal doesn't automatically end the sale. Common options include:

• Renegotiate the purchase price to better match the appraised value.
• The buyer pays the difference between the appraised value and the purchase price, if they're financially able.
• Split the difference, with both buyer and seller making concessions.
• Request a review if there are concerns that the appraisal overlooked important information or comparable sales.

Which of these is open to you depends on the appraisal terms in your contract and the goals of both parties. I'm not an attorney, so your attorney can confirm what your contract provides.

One of the best ways to reduce the risk of appraisal issues is to price your home based on current market data.

A competitive pricing strategy supported by recent comparable sales can:

• Attract qualified buyers
• Support the contract price
• Improve the likelihood of a smooth appraisal

I build a list price from absorption rate and days on market, and I show you the math. You can see how that works in the pricing step of The Sequence, my process for selling a home. If your home is already listed and the offers aren't coming, my post on whether to lower your price or wait may help.

If an appraisal comes in lower than expected, having experienced guidance is important.

A local South Florida real estate professional can help you:

• Look at the comparable sales the appraisal used
• Evaluate your options
• Negotiate with the buyer
• Keep the transaction moving whenever possible

It also helps to know where the buyer's financing stands before you accept the offer. I verify a buyer's financing before an offer is accepted, so an appraisal question doesn't arrive on top of a loan question.

A low appraisal doesn't always mean your sale will fall through.

Understand your options:

• Renegotiate the price
• Review the appraisal
• Work with the buyer on a solution
• Rely on current market data

A clear plan can help keep your home sale on track, even when an appraisal comes in low.

An appraisal is one of several steps between an accepted offer and closing day, and it goes better when the price was built on data from the start. At Nanci Gilbert, PA, that's where I begin with every seller. You can read more about selling your home in South Florida, or see the page for selling a home in Homestead.

To see what the recent sales say about your own home, start with a complimentary home valuation. When you're ready, send me a note and we'll look at the numbers together.